1. China's gas strategy
China's energy strategy was formulated in 2004 with six words. The position of natural gas is: developing clean energy, protecting the environment, ensuring supply and diversifying sources. According to the NDRC's plan, China will need 100 million tons of natural gas by 2010, but it can supply less than 70 million toe. By 2020, it needs 220 million toe, but domestic supply will not exceed 120 million toe, so 100 million toe of natural gas needs to be imported. It provides a world manufacturing base for cheap and quality products, with a per capita energy share of only half the world's average, it is natural to import oil and natural gas from abroad. In addition to the needs of the transportation and chemical industry, China's primary energy source, which accounts for 70% of China's coal, it is mainly to optimize the energy structure and improve the atmosphere to ensure sustainable development. This policy of developing clean energy will not change.
2. China's natural gas market in the future
In the next decades or so, there will be a diversified natural gas market in China with seven different sources.
1). The big gas fields in the west are the main sources of China's natural gas, concentrated in the great basins of tarim, junggar, ordos, Sichuan, and Songliao. It will be transported to the user area through the main pipeline network of west gas east.
2). Small gas fields should not be ignored. China's natural gas resources are characterized by low abundance, dispersion and small scale. In Russia, Qatar and the Middle East, the 100 billion cubic meters of gas fields are already big gas fields in China. Because of the small amount of total reserves, the construction of pipeline network and natural gas pipeline network connection economy is not economical. There are two approaches to development: one is to use local network of small areas to consume nearby. The second is to use local liquefaction, tanker transport, to participate in the operation of LNG domestic market.
3). The coalbed methane. CBM has 30 trillion cubic meters of reserves in China and will be an important source of CH4 in China, in addition to large resources, the development of coalbed methane is the same as the development of LNG gas fields. Either the pipe network is connected to the nearby user, or the local liquefaction, the tanker transport. At present, a foreign company is developing a coal-bed gas field in Guizhou, which is to use liquefaction to enter the onshore LNG market.
4). Offshore natural gas. Natural gas fields discovered in the east China sea and the south China sea can be transported by pipeline to land near the mainland, such as pinghu and Shanghai. Further, the FBSO can be adopted, a floating liquefaction ship at sea, will be shipped to the receiving station after liquefaction of the surface of the wellhead.
5). Imported pipes and gas. It includes two lines of between 60 billion and 80 billion cubic meters a year, both of which are already under agreement with Russia. It also has about 70 billion cubic meters of gas a year in negotiations with Kazakhstan and Turkmenistan.
6). LNG project imported from sea. In addition to guangdong, the project of fujian and Shanghai has been approved by the national development and reform commission, and there are still a few. According to the estimate of natural gas demand/self-production balance, the shortfall of 300~50 billion m3 in 2010 and the gap of nearly 100 billion m3 in 2020, some of which need to import tens of millions of tons of LNG annually.
7). Biomass gas. The vast majority of rural areas in China have grown up in rural areas in the past ten years. It is estimated that tens of billions of cubic meters can be reached each year. Although this kind of air source is more dispersed and mainly consumed in the local area, it will also be connected to the network to balance the production and consumption.
3. The price of LNG international market is related to the domestic price in China
Most of China's natural gas resources are in the economically underdeveloped areas of Western China, But the main consumption land in the southeast coastal developed areas, the area and the consumption of the pattern, formed a kind of price complementarity. When the west east gas transmission project was put into operation, the cost of pipeline transportation from Xinjiang to Shanghai in the eastern part of China was about RMB 1 yuan / m3. Xinjiang Guanghui liquefied natural gas is transported to more than 4000 kilometers in Fujian via diesel tanker, which is also 1 yuan/m3 before the oil price increase in 2005 (2 yuan/m3 is the current price). In 2002, the price of a 25-year non-negotiable LNG contract signed by China in Australia was about RMB 1 / m3. The price of LNG downstream for natural gas approved by the national development and reform commission is 1.45 yuan/m3. The price of cif and gasification pipeline and the receiving station cost 1.45 yuan/m3 to Shanghai.
But now the international LNG market has gone from $3 / MMbtu to $6 / MMbtu, the Chinese government has not significantly raised the resource tax on domestic oil and gas extraction. Thus, the "coincidental" relationship between the price of western gas and the price of imported LNG has changed. So there are a lot of voices in the country. Three oil companies have asked the national development and reform commission to raise the price of natural gas. Some have criticized the LNG for overheating, cooling and so on.
As mentioned above, the cost of LNG production is not raised, and the price increase is the result of international political and economic game. The gas-producing state maintains a balance between domestic prices and international prices by regulating resource taxes and export taxes. In such circumstances, how does China balance the price of natural gas and imported LNG? The most feasible measures, which are most conducive to resource conservation and sustainable economic and social development, are to gradually establish a resource tax collection mechanism including energy and other mineral resources. Determine different tax rates according to the geographical location, scale and abundance of domestic resources; Adjust tax rates according to international market price changes; At the same time, the subsidy mechanism should be established according to the degree of economic development and income level, especially the tolerance of vulnerable groups. This is to balance the price of imported LNG and the price between different parts of the country and different consumer groups. China should impose export taxes and limit energy exports; By collecting resource tax to control and restrain the irrational use of energy, and encourage efficient utilization. The establishment of this important mechanism will soon be mentioned on the agenda.
4. Price relationship of various kinds of natural gas in domestic market
At present, there is a misunderstanding between the FOB price of LNG and the price of the gate. The price of domestic natural gas gate is up 50% when FOB is up from $4 / MMbtu to $6 / MMbtu, or 50% higher. This view is wrong. Literature [4] gives an analysis of the change of the FOB price of LNG from $4 / MMbtu to $6 / MMbtu. When offshore downstream link, including shipping, gasification, terminal line investment depreciation and management fees, the cost of LNG project the company's profits increase of 0.62 yuan/m3, the door will stop price from 1.78 yuan/m3 to 2.37 yuan/m3, namely increases about 33%, far less than 50% of FOB price gains.
In the context of China's natural gas market, the above gas fields and coalbed methane are located through the price of liquefied land transport. They are clearly dependent on the gas price of the gas pipeline and the LNG to the gate and the market structure of the domestic natural gas clients that are formed by these two prices. If the development of small gas fields and coalbed methane in the domestic LNG land transportation market is higher than the local production of chemical fertilizer, it will not be used on the spot. Of course, the prices of small gasfields in poor areas should not be too high. The cost and efficiency factors should be determined by the pipeline transportation to different users through pipelines. This is determined by market economy relations, regional economic development and the harmonious and stable life of the people.
The price of imported gas is actually a game of interest between the Chinese government and the governments of resource-exporting countries. Russia, a resource exporter, wants China to buy $230 / 1000 m3 for gas exports to Europe. China is a vast developing country. China's southeast coast is capable of buying $6 / MMbtu (about 2.4 yuan/ m3) of LNG at international market prices. But the Xinjiang region of northwest China can't afford the $230/1000 m3 (1.84 yuan/ m3) European price of pipeline gas. Because it will cost 3 yuan/ m3 or more to get it to the east, Shanghai can't afford it. Russia's natural gas trade with China can only be done on both sides. In short, whether it is imported LNG, the inlet pipe gas, their development of west gas to east natural gas, price formulation should be made of different regional economic development level, geographic location, consider all sorts of different origin, development, transportation costs to achieve a balance of economic interests, and the country's overall interests.
5. The trend of economic development and exchange rate changes on natural gas prices
In the past 30 years since the reform and opening up, China's economy has developed rapidly, and its position in international economic and trade has risen sharply. The more developed southeast coastal regions, the affordability of oil and gas prices, have improved greatly from 20 years ago. In 2005, when oil prices were soaring, China imported 146 million tonnes of oil, three times of India's imports. China's population is only 30% more than India's. This is the demand of China's manufacturing industry and transportation industry, which is also the embodiment of affordability. Of course, there is also the government's macro-control to transfer some of the high oil prices to the three oil companies, and reduce the consumer's burden. However, the more economic development, the stronger the price of oil.
Since last July's revaluation, the dollar has fallen from 8.26 to nearly 7.7. With the appreciation of the RMB, the import of international LNG and domestic gas parity will decline. This factor will also strengthen China's ability to withstand international LNG prices.
